“Even if the falling volatilities on the markets suggest something else the uncertainty about the hurdles to be overcome by a Spanish request for help and the implementation and implications of the ECB’s Outright Monetary Transactions has caused many market participants to remain on the side-lines”, wrote analyst Carolin Hecht, allowing EUR/USD jumps in such environment, with no important data publications and non-events such as the Rajoy-Hollande meeting. “The Fed’s Beige Book is due in time for US trading, its anecdotal evidence on the US economy might question the positive labour market report of last week”, analysts wrote.
During Asian trading EUR-USD recorded a new low at 1.2835 this morning. At the lower end the currency pair now meets solid support around the 200 day ma at 1.2825.
“Should EUR-USD fail at these levels (200-day MA at 1.2825) we do not expect it to experience a further round of party mood though following the recent disenchantment”, they said, pointing to next resistance at 1.2975 and a very limited upside potential.